We are going to work together to see if we can't find a way to accommodate grandma -- and others -- here in Canada. But we have to figure out a way to do it without letting the person who is trying to evade taxes in the Cayman Islands off the hook. My message on this one is to sit tight. We are not unreasonable. We are not unsympathetic. We are not irresponsible.

This seems to sort of kind of maybe hint at some kind of compromise. From the IRS's side, their ideal of total compliance from Canada would involve hundreds of thousands of inexpertly prepared returns, submitted on paper, almost none of which would show any tax due. If they're understaffed, I can't imagine they want to deal with that. A dark part of me wonders if they plan to make up the revenue with penalties, but then the penalties aren't enforceable in Canada.

If there's something in the works, what do we think it would look like?

One possible compromise would involve a deal with the CRA in which USCs resident in Canada with no US income attached a form to their Canadian returns with their SSN, a statement that they had no US source income, and an acknowledgement that the IRS could require them to file a formal return if wanted. This system could work well in a few First World countries with lots of USCs - Canada, Australia, the UK.